Report: FERC to cap power rates

WASHINGTON (CBS.MW) - Federal regulators will reportedly move to cap wholesale power rates in the western United States at a meeting next week.

The Federal Energy Regulatory Commission, which imposed limited price caps late last month, will consider expanding the caps to run 24 hours a day in 11 western states whose power grids are closely linked, CBS News reported on its web site and in a broadcast report.

Moody's: Edison on upgrade review

Moody's Investors Service placed troubled Edison International's credit rating on its "watch" for a possible upgrade Tuesday as the company plans to pay off debt due this year through a bond sale by its Mission Energy subsidiary. The review affects only the Caa3-rated senior unsecured debt of Edison International
EIX, +0.21%
Standard & Poor's rates the debt C. Its Mission Energy Holding Co., a wholly owned unit created in part to administer such bond sales, plans to sell $1.2 billion in 7-year notes that could begin pricing on Wednesday.

Edison CFO: There's still time for asset sale plan

Edison International's chief financial officer, Ted Craver Jr., said that there is time to get Edison's plan to sell transmission-line assets passed before its Southern California Edison utility must declare bankruptcy. "There is time to get the MOU passed," Craver said during a conference call to note holders Tuesday. The MOU refers to the Memorandum of Understanding that Edison has with the governor; it calls for the state's purchase of the utility unit's transmission lines in a move to help it pay back debts accrued on the spot wholesale market. "We still have certainly some degree of optimism," Craver said, emphasizing that the company and its utility continue to favor the plan over bankruptcy. He also said that the MOU calls for action before the end of the legislative session this summer. "We'll have to see whether the legislature can get it done before the July recess," he said, but "we certainly think there's a window there."

'Not out of the woods yet' in California

Gov. Gray Davis has hailed a drop in California's electricity prices in recent weeks, but "we're not saying we're out of the woods yet," a senior energy advisor to the governor said Tuesday. "We are still asking FERC to keep prices at a reasonable rate," said S. David Freeman during a conference call, noting that the kind of prices that power providers are charging "will wipe out businesses all over the place." Freeman also said that its procurement of long-term power contracts for between one-third and two-thirds of the power that the state needs has helped close the price gap, but he equated the resulting market price move to having come down from the "moon to Cloud 9." "We're bailing ourselves out," he said, "but we want the federal government to get back on the job that only they can do."

EPA rejects California on gasoline waiver

Shares of ethanol producers rose Tuesday after the federal government ruled that Californians will still need to buy reformulated gasoline this summer. "We cannot grant a waiver for California, since there is no clear evidence that a waiver will help California to reduce harmful levels of air pollutants," said EPA Administrator Christine Todd Whitman.

Natural gas powers electricity prices

Natural-gas prices may rise this summer but are unlikely to reach the highs that helped spark the jump in electricity prices paid by the energy-starved state of California, an analyst said Tuesday. The lack of extreme weather and a 5 percent rise in natural-gas production since the start of the year have caused U.S. inventories of natural gas to more than double from their 627 billion cubic foot low in March to 1,398 billion for the week ended June 1, John Kilduff, a vice president at Fimat, told CBS.MarketWatch.com. Natural gas reached an all-time high price of $10.10 per million British thermal units last December, but trading is now around the $4 level. If natural-gas prices continue to decline, they should have a "moderating effect" on electricity prices as the summer moves on, Kilduff said.

Crude supplies drop

The latest report on U.S. inventories released late Tuesday revealed a whopping 13 million-barrel decline in crude supplies, along with a 6.3 million-barrel climb in gasoline inventories. Ahead of the data, crude and gasoline prices climbed on concerns over lower refinery capacity in the wake of a tropical storm on the Gulf Coast.

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